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  1. #1
    Join Date
    Apr 2011
    Posts
    182

    Default Selling Stocks

    My question involves personal finance in the State of: CA

    I am considering selling stocks that I was given by my employer, for the first time. Itís been a few years and I would like to cash out. My understanding is that I will have to pay taxes on the capital gains. I believe the capital gains are calculated on the difference between the cost basis and the gain. So letís say the cost basis was $10,000 (which is the value of the stocks, when the stocks were given to me) Letís say I sell them for $100,000, so the capital gains tax that I have to pay will be on $90,000.

    Does the financial institution send me a statement showing me what the gain is and the details of the transaction? And since I do my own taxes, so I just input this into turbo tax and it will calculate how much in taxes I have to pay?

  2. #2
    Join Date
    Oct 2006
    Posts
    16,474

    Default Re: Selling Stocks

    Quote Quoting jyeh74
    View Post
    My question involves personal finance in the State of: CA

    I am considering selling stocks that I was given by my employer, for the first time. It’s been a few years and I would like to cash out. My understanding is that I will have to pay taxes on the capital gains. I believe the capital gains are calculated on the difference between the cost basis and the gain. So let’s say the cost basis was $10,000 (which is the value of the stocks, when the stocks were given to me) Let’s say I sell them for $100,000, so the capital gains tax that I have to pay will be on $90,000.

    Does the financial institution send me a statement showing me what the gain is and the details of the transaction? And since I do my own taxes, so I just input this into turbo tax and it will calculate how much in taxes I have to pay?
    It really depends on how the stock transaction was structured by your employer.

  3. #3
    Join Date
    Apr 2011
    Posts
    182

    Default Re: Selling Stocks

    It was given as RSUs. A set amount given at once, vested 100% when given.

  4. #4
    Join Date
    Oct 2006
    Posts
    16,474

    Default Re: Selling Stocks

    Quote Quoting jyeh74
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    It was given as RSUs. A set amount given at once, vested 100% when given.
    If that is the case, that they were fully vested when they were given to you, then their value should have been included in your W2 for the year that they were given to you, and you should have been taxed in that year for their value. If that is the case then yes, it would be a standard capital gain situation and based on your original post, a long term capital gain.

    You should get a Form 1099-B showing the sale of the stock and its selling price and cost basis. You would then use that form to enter the necessary information on Schedule D, and Form 8949, which would then carry to your 1040. I cannot tell you how TurboTax would have you enter that information, as I only use professional software. I assume however that they might just have you enter the 1099-B into something that looks like the 1099-B and then they would autofill everything else.

    You could consider using a tax professional this year just to make sure that it's done right.

  5. #5
    Join Date
    Apr 2011
    Posts
    182

    Default Re: Selling Stocks

    Thank you for the detailed explanation. I actually do not recall if it was added to my w2 that year it was given to me. Itís been many years but I donít think it was.

  6. #6
    Join Date
    Oct 2006
    Posts
    16,474

    Default Re: Selling Stocks

    Quote Quoting jyeh74
    View Post
    Thank you for the detailed explanation. I actually do not recall if it was added to my w2 that year it was given to me. It’s been many years but I don’t think it was.
    If it was not included in your W2 in the year that it was given to you then it gets more complicated. Its even possible that the entire sale could be treated as ordinary income. You need to be having some serious discussion with your employer about the details and then with a local tax professional.

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